BETWEEN THE HEDGES

Monday, March 13, 2006

Tuesday Watch

Posted by Gary .....at 11:46 PM

Late-Night Headlines
Bloomberg:
- Stocks in Dubai, Egypt, Jordan, Kuwait and Saudi Arabia, among the world’s best performers since 2003, are sliding amid a record number of planned IPOs and concern that prices have outpaced the outlook for earrings growth.
- China and Russia are blocking agreement on a US-backed statement by the UN Security Council that Iran must suspend uranium enrichment activities, US Ambassador John Bolton said.
- Emerging-market equity funds have attracted $20.9 billion this year, eclipsing the record inflows they garnered in all of 2005.
- Chinese Premier Wen Jiabao criticized the Taiwanese government for “highly risky and dangerous” actions and threatened to respond to steps toward independence.
- Comcast Corp.(CMCSA), the majority owner of the E! Entertainment Television cable network, is in talks to buy the remaining 40% stake from Walt Disney(DIS).

Wall Streete Journal:
- US Justice Department attorneys on a case against Google(GOOG) will argue tomorrow that the release of the company’s search records won’t violate consumer privacy.

Financial Times:
- Best Buy(BBY) is in talks to buy a minority stake in Five Star Appliance, China’s fourth-largest electronics retailer.

China Daily:
- Juniper Network’s(JNPR) sales in China rose 50% last year from 2004, citing the company’s Chairman and CEO.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are -1.0% to -.25% on average.
S&P 500 indicated -.09%.
NASDAQ 100 indicated -.18%.

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Earnings of Note
Company/EPS Estimate
- (BKD)/.06
- (GS)/3.29
- (LEXR)/-.16
- (PDE)/.29
- (SUG)/.42
- (VTIV)/.28

Upcoming Splits
- (BMHC) 2-for-1
- (GWR) 3-for-2
- (PALM) 2-for-1

Economic Releases
8:30 am EST
- The Current Account Deficit for 4Q is estimated to widen to -$218.0 billion versus -$195.8 billion in 3Q.
- Advance Retail Sales for February are estimated to fall .8% versus a 2.3% gain in January.
- Retail Sales Less Autos for February are estimated to fall .5% versus a 2.2% gain in January.

10:00 am EST
- Business Inventories for January are estimated to rise .3% versus a .7% increase in December.

BOTTOM LINE: Asian indices are lower, weighed down by technology shares in the region. I expect US equities to open lower and to rise into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Finish Slightly Higher, Led by Energy Shares

Posted by Gary .....at 7:11 PM

Indices
S&P 500 1,284.13 +.20%
DJIA 11,076.02 unch.
NASDAQ 2,267.03 +.22%
Russell 2000 728.04 +.23%
Wilshire 5000 12,914.81 +.22%
S&P Barra Growth 606.82 +.15%
S&P Barra Value 673.86 +.25%
Morgan Stanley Consumer 611.68 +.32%
Morgan Stanley Cyclical 780.99 -.35%
Morgan Stanley Technology 529.87 +.27%
Transports 4,454.02 -.05%
Utilities 400.81 +.22%
Put/Call .85 -2.30%
NYSE Arms .75 -.43%
Volatility(VIX) 11.37 -4.05%
ISE Sentiment 118.00 -24.36%
US Dollar 90.54 -.34%
CRB 322.99 +1.12%

Futures Spot Prices
Crude Oil 61.95 +.30%
Unleaded Gasoline 176.85 +1.45%
Natural Gas 7.07 +.91%
Heating Oil 174.93 +.66%
Gold 547.20 -.05%
Base Metals 165.75 +.66%
Copper 224.50 -.02%
10-year US Treasury Yield 4.71% -.36%

Leading Sectors
Oil Service +1.99%
Energy +1.97%
Computer Hardware +1.47%

Lagging Sectors
Oil Tankers -.91%
Steel -1.07%
Airlines -1.16%

Evening Review
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Afternoon Recommendations
Goldman Sachs:
- Lowered STTX to Underperform.

Afternoon/Evening Headlines
Bloomberg:
- Bill Gross, CIO at PIMCO, told CNBC he expects one or two more interest-rate increases from the Fed.
- AstraZeneca Plc’s(AZN) cholesterol-lowering drug Crestor reduced artery-clogging plaque in test patients, the first time a pill has ever reversed the years of damage that lead to heart attacks, researchers said.
- Rambus Inc.(RMBS), after six years of pursuing patent litigation against memory chip makers, presents its first case to a jury this week at a trial against Hynix Semiconductor.
- General Motors(GM) will offer buyers as much as $1,000 per vehicle on older cars and trucks in US dealer inventories.
- Australian troops will stay in Iraq “well into” 2007, Defense Minister Brendan Nelson said.
- Crude oil is rising a second day in NY as the UN prepares to consider Iran’s refusal to end its nuclear research and colder weather in the northern US boosted heating fuel prices.
- Apple Computer(AAPL) paid CEO Jobs $1 in salary and no bonus in 2005 after he guided the maker of the iPod music player and iMac computer to its biggest profit ever.

DPA-AFX:
- BMW AG, the world’s largest luxury carmaker, plans to build a hydrogen-powered car within the next two years.

BOTTOM LINE: The Portfolio finished unchanged today as gains in my Computer longs and Networking longs offset losses in my Energy-related shorts. I did not trade in the final hour, thus leaving the Portfolio 50% net long. The tone of the market was slightly positive today as the advance/decline line finished modestly higher, sector performance was mixed and volume was below average. Measures of investor anxiety were mostly lower into the close. Overall, today's market performance was mildly bearish. The continuing weakness in semis is of concern. As well, investors continue to ignore most good news and focus on potential negatives. The major averages are not acting as though they are done with the recent correction.

Stocks Finish Slightly Higher, Led by Energy Shares

Posted by Gary .....at 7:09 PM

BOTTOM LINE: The Portfolio finished unchanged today as gains in my Computer longs and Networking longs offset losses in my Energy-related shorts. I did not trade in the final hour, thus leaving the Portfolio 50% net long. The tone of the market was slightly positive today as the advance/decline line finished modestly higher, sector performance was mixed and volume was below average. Measures of investor anxiety were mostly lower into the close. Overall, today's market performance was mildly bearish. The continuing weakness in semis is of concern. As well, investors continue to ignore most good news and focus on potential negatives. The major averages are not acting as though they are done with the recent correction.

Stocks Slightly Higher into Final Hour, Led by Energy Shares

Posted by Gary .....at 3:10 PM

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet longs, Computer longs and Networking longs. I covered some of my (IWM) and (QQQQ) shorts and added back to them, thus leaving the Portfolio 50% net long. The tone of the market is modestly positive as the advance/decline line is slightly higher, sector performance is mostly positive and volume is below average. Tech stocks are coming under pressure, led down by semis. The averages are not acting as though they are done with the recent correction. I expect US stocks to trade mixed into the close from current levels as weakness in the tech sector and higher energy prices offsets bargain hunting and short-covering.

Today's Headlines

Posted by Gary .....at 2:13 PM

Bloomberg:
- Federal Reserve Bank of San Francisco President Yellen said announcing an inflation goal would improve the central bank’s credibility, while doing the same for the jobless rate would cause more harm than good.
- Crude oil is rising in NY, led by natural gas, on short-covering and expectations of cold weather across the northern US later this month.

Wall Street Journal:
- Aozora Bank Ltd. is expected to contribute $1 billion to help Cerberus Capital Management finance a bid for General Motors’ financing arm.
- Medco Health Solutions(MHS) and some US insurers and government agencies are deploying their own sales reps to persuade doctors to prescribe alternatives to expensive brand-name drugs.
- Pinnacle Entertainment(PNK), the casino owner that had a property in Mississippi suffer extensive damage because of Hurricane Katrina, is in advanced talks about a takeover of rival Aztar Corp.(AZR) for more than $1 billion.
- Berkshire Hathaway(BRK/A) Chairman Warren Buffett says he’s buying foreign securities, betting that the dollar will decline, but there are risks for small investors who follow suit.
- IBM(IBM) will sell some consulting services to small- and medium-sized businesses, as it hopes to boost its income in those operations.
- The prices of emerging-market bonds are falling as investors switch to those in developed countries such as the US.

USA Today:
- Cendant Corp.(CD) plans to announce today that 117 of its Avis Budget rental car centers in NY and Houston will let customers pay tolls electronically.

NY Times:
- US media companies are seeking to acquire new content and technology companies, as they try to attract niche audiences on the Internet.

Washington Post:
- Discovery Communications produced a home version of its online video encyclopedia to help students in kindergarten through 12th grade with their homework.

Reuters:
- Royal Dutch Shell Plc is planning an increase in investment in Russia that may include a third major venture.

Interfax:
- Russia is “very disappointed” by Iran’s behavior over a Russian proposal aimed at breaking the international deadlock over the Islamic Republic’s nuclear program.

Financial Times:
- Sales of bonds backed by commercial mortgages may increase by about 40% this year.

Handelsblatt:
- IBM(IBM) aims to focus more on hardware and software technology after putting too much emphasis on growing its services business in recent years.

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Monday, March 13, 2006

Tuesday Watch

Stocks Finish Slightly Higher, Led by Energy Shares

Stocks Finish Slightly Higher, Led by Energy Shares

Stocks Slightly Higher into Final Hour, Led by Energy Shares

Today's Headlines